Author Question: Discraft Inc. is expected to pay an annual dividend of $1 at the end of the current year. (Discraft ... (Read 45 times)

Ebrown · **on:** Apr 25, 2021

Discraft Inc. is expected to pay an annual dividend of $1 at the end of the current year. (Discraft pays its dividends annually.) The dividend is expected to grow quickly over the ensuing year at the rate of 20%. Starting two years from today the growth rate of dividends will fall to a rate of 3% and continue at that rate in perpetuity. Investors require a 12% return on the stock. Estimate the market price of the shares of Discraft in one year's time (at Year 1) just after the next dividend is paid.
◦ $11.24
◦ $11.62
◦ $12.80
◦ $13.33
◦ $14.82

duy1981999 · **Reply #1 on:** Apr 25, 2021

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